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Notes Chapters 1-4

# Notes Chapters 1-4 - Chapter 1 Vocabulary Constraint A...

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Chapter 1: Vocabulary: Constraint: A mathematical relationship that represents limited resources of minimum levels of activity Data: pieces of information from the problem environment Decision variable: a variable whose value represents a potential decision (EX: max z=\$20x-5x (the x)) Fixed costs: independent of the volume of units produced and sold and remain constant Functional relationship: the equation as a whole. Model: functional relationship that includes variables, parameters, and equations. Objective function: a mathematical relationship that represent the object of a problem solutions (model) Parameters: known, constant values that are often coefficients of variables in equations (numbers \$20 & \$5) Usually remain constant Variable costs: are determined on a per-unit basis Volume: level of sales or production of a company (number of units, dollar amount, % of total capacity) Symbols: v- volume C v – variable cost C f – fixed cost Management science is the application of a scientific approach to solving management problems in order to help manager make better decisions. (Operations research, quantitative methods, quantitative analysis, and decision sciences) Scientific method(management process): 1)Observation-Identification of a problem 2)Problem definition-defines the limits and the degree to which it pervades other units of the organization. Also defines goals or objectives of the firm. 3)Model Construction- a model is an abstract representation of the problem (graph, chart, equation) 4)Solution- The solution to a problem is not a decision but rather just information. Can be either a recommended decision or information that helps a manager make a decision. 5)Implementation-Actual use of the model once it has been develop

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Operations research began in WWII Break even analysis (profit analysis)- where total revenue equals total cost and profit is 0 The three components of Break even analysis include volume, cost, and profit.
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Notes Chapters 1-4 - Chapter 1 Vocabulary Constraint A...

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